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Combatting debt bias in South African firms: The case for an allowance for corporate equity

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  • Seppo Kari
  • Londiwe Khoza
  • Nangamso Manjezi
  • Kyle McNabb

Abstract

The problem of debt bias can be tackled through either disincentivizing the use of debt financing or incentivizing the use of equity financing. Considering the South African context—in which many firms are highly leveraged and the marginal effective tax rates for using debt financing are significantly lower than those for equity financing—this study explores the case for introducing an allowance for corporate equity.

Suggested Citation

  • Seppo Kari & Londiwe Khoza & Nangamso Manjezi & Kyle McNabb, 2019. "Combatting debt bias in South African firms: The case for an allowance for corporate equity," WIDER Working Paper Series wp-2019-10, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2019-10
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    References listed on IDEAS

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